First sanctions case: transfer of assets brings scrutiny. (The IRS).Recent votes on legislation to permanently repeal the estate tax stirred the concerns of some in the nonprofit community who believe a permanent repeal will decrease charitable giving, shift tax burden to middle- and lower-class taxpayers, and force government to cut nonprofit subsidies.
Supporters of a permanent estate tax repeal assert it may lead to more charitable giving because people will save on taxes and tax-avoidance costs, capital gains taxes will recoup recoup
To sell an asset at a price sufficient to recover the original outlay or to offset a previous loss. some projected government revenue losses, and government has a hard time targeting programs and effectively spending additional revenue.
In June, the U.S. House of Representatives and Senate voted on bills, aiming to permanently repeal estate taxes. The House passed legisliation making the estate tax repeal permanent. But the real battleground was in the Senate, where permanent repeal fell short of the 60 votes needed to gain majority The final vote was 54-44 with two senators not voting.
Despite this vote, this issue will arise again.
"If we don't get there, I think groups are planning on continuing to push for it until it's made permanent," said Paul Boyle, vice president of government affairs for Newspaper Association of America The Newspaper Association of America is a United States trade association that represents the country's largest daily newspapers and provides services including market research, technology education and support, minority hiring and representing publishers in Washington, D.C. (NAA NAA
Nomina Anatomica Avium. ) headquartered in Vienna, Va., which supports permanent repeal.
"I think if all goes well, we will have won a skirmish but not the overall battle or war," said Gary Bass Gary D. Bass is the founder and Executive Director of OMB Watch.
Dr. Bass received a combined doctorate in psychology and education from The University of Michigan. He was President of the Human Services Information Center before founding OMB Watch in 1983. , executive director of OMB Watch OMB Watch is a 501(c)(3) nonprofit organization based in Washington, DC. OMB Watch was formed by Gary Bass in 1983 to lift the veil of secrecy shrouding the White House Office of Management and Budget (OMB). , before the vote. "They will be back to talk about repeal. We in the nonprofit community have got to do a better job of educating our sector about the issues and coming up with what is a responsible reform approach."
Estate taxes affect individuals who leave behind estates worth more than $1 million in 2002. The highest tax rate in 2002 is 50 percent. The tax affects the wealthiest 2 percent of Americans.
Last year's tax cuts gradually increase the starting tax threshold for individuals to $3.5 million by 2009 and lessen the highest tax rate to 45 percent. The estate tax is repealed in 2010 and then reinstated in 2011.
The estate tax raised $28 billion in 1999. Eliminating it will cost an estimated $100 billion in revenue for the federal government over the next 10 years, according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. Americans for a Fair Estate Tax (AFET AFET Association Française d'Entérostoma-Thérapeutes
AFET Asociación de Farmacéuticos Empresarios de Tarragona ), a coalition of nonprofits that oppose permanent repeal.
At issue is what motivates people to make bequests or donations to charities.
Some nonprofit and foundation officials fear it will reduce charitable giving to nonprofits and foundations by eliminating wealthy Americans' need to seek tax breaks through bequests.
Chuck Collins Chuck Collins (b. 1959) is an author and a senior scholar at the Institute for Policy Studies in Washington, DC, where he directs the Program on Inequality and the Common Good. , co-founder of Responsible Wealth in Boston, a project of United for a Fair Economy, said studies estimate that erasing the estate tax would cut charitable bequests by 12 percent or $6 billion -- $7 billion per year in lost revenue.
"The common sense evidence is the estate tax is an incentive for charitable giving," Collins said.
Paul Schervish, director of Social Welfare Research Institute at Boston College Boston College, main campus at Chestnut Hill, Mass.; coeducational; Jesuit; est. and opened 1863. Actually a university, the school's Chestnut Hill campus comprises colleges of arts and sciences and business administration, the graduate school, and schools of nursing in Chestnut Hill Chestnut Hill may refer to:
Schervish argued that once a wealthy person assures financial security for family members, which they define as maintaining a chosen standard of living for children and grandchildren GRANDCHILDREN, domestic relations. The children of one's children. Sometimes these may claim bequests given in a will to children, though in general they can make no such claim. 6 Co. 16. , that person's remaining wealth is available for charity.
"When you think of it that way the propensity, not for everybody, is not to give it to heirs any further because they made a decision about that, but to choose then between government and charity," Schervish said. "If the estate tax was repealed, there is no reason to think that they wouldn't still choose charity when they have solved the economic problems for themselves and their heirs."
Leaving out estate amounts going to spouses, a trend shows that a greater proportion of estates is going to charity Schervish said.
Dan Blankenburg, manager of legislative affairs at National Federation of Independent Businesses The National Federation of Independent Businesses (NFIB) is the largest U.S. advocacy organization representing small and independent businesses. The NFIB has a membership of 600,000 business owners, including commercial enterprises, manufacturers, family farmers, neighborhood retailers, in Washington, D.C., said, "We never really believed that the tax code was the motivation for the charitable giving."
NFIB NFIB National Federation of Independent Business
NFIB National Foreign Intelligence Board supports permanent repeal because officials believe it unfairly "attacks" family-owned businesses.
Others would rather have a definite motivator for giving. "We can hope for a spirit of goodwill and that people will give money," said Bass, who is also chairman of AFET. "I don't want to just hope. We know that tax initiatives serve as an enormous incentive for giving."
The nonprofit community agrees the estate tax needs to be reformed, but hasn't said in a unified voice what reform it supports. Common options nonprofit representatives gave are raising the exemption threshold, ensuring small businesses and farms are taxed fairly, ensuring the government has adequate revenue to pay for services, and ensuring it doesn't adversely affect charitable bequests.
Blankenburg said past reform attempts that raised the exempt threshold became ineffective because of inflation and businesses had trouble qualifying for family-business exemptions.
"It's very important that people understand the policy we're asking for," Blankenburg said. That policy is eliminating estate taxes and replacing them with capital gains taxes, he said.
Sens. Phil Gramm William Philip "Phil" Gramm (born July 8, 1942, in Fort Benning, Georgia, USA) served as a Democratic Congressman (1978–1983), a Republican Congressman (1983–1985) and a Republican Senator from Texas (1985–2002). (R-Texas) and Jon Kyl
Senate Majority leader Tom Daschle (1)-S.D.) opposed permanent tax cuts, including making the estate tax repeal permanent, until the country figures Out how to get out of deficits, a Daschle spokeswoman said in a telephone message. Daschle's spokeswoman also said he was concerned about its effect on charitable giving and state budgets.